Welcome to my Weekly Weed Report for Thursday, February 15. The article below is a condensed transcript; the video contains further details and several charts.
One of the shrewdest and surest ways to make money is to pinpoint investment “megatrends” that will unfold over the long term, regardless of whether we’re in a bull or bear market, an economic expansion or recession.
Which begs the question: What will be the megatrends for the marijuana industry in 2024? Here’s what my research tells me. But first, some legal context.
In the U.S., as of February 15, 2024, cannabis is legal in 38 of 50 states for medical use and 24 states for recreational use. To be sure, marijuana remains illegal in many states and at the federal level. But this fact translates into enormous room for future growth (see the following chart).
It’s not just in the United States. Marijuana is getting legalized around the world, especially in Europe.
Case in point: A bill to legalize marijuana in Germany is officially on the legislative agenda for next week, a sign that the government’s plans to enact the reform by April 2024 are on track. Germany is the largest economy in Europe and has the potential to be the largest marijuana market on the Continent.
After a brutal and prolonged slump in 2023, marijuana stocks as a whole are rebounding so far in 2024. Take a look at the following graphic:
The benchmark AdvisorShares Pure Cannabis ETF (YOLO) has generated a year-to-date daily total return of 14.24%, compared to 4.89% for the SPDR S&P 500 ETF Trust (SPY), as of market close February 14.
Now, let’s examine the 10 ironclad, unstoppable trends that will drive marijuana stocks higher in 2024 and for years for come.
1. Cannabis Sales Will Rapidly Grow
Several legalization measures are on state ballots for the forthcoming presidential election in the U.S.; most of these initiatives are heavily favored to pass (see my video for details). As the number of legal markets grows, so will sales.
Also fueling sales will be greater social and political acceptance of formerly demonized cannabis.
2. More “Red States” Will Legalize Marijuana
Many of the stalwart pot prohibitionists, most of whom live in culturally conservative, Republican-dominated states, will be forced to capitulate.
Politicians can read the polls and it’s clear that the legal normalization of pot is widely popular. State and local governments also are getting addicted to the tax revenue that’s generated by legal cannabis.
3. There Will Be a Proliferation of New Cannabis Products
We’ll see cannabis become even more of a mainstream consumer product, with the introduction of a wide variety of marijuana-infused products, including new “flower” strains, vapes, edibles, beverages, foods, cosmetics, you name it.
We’ll especially see fast growth in edibles and beverages, infused with either THC or CBD. The retail shelves of America will be invaded with a panoply of innovative offerings and brands.
4. Consumers Will Be More Demographically Diverse
We’re likely to see more senior citizens embrace pot use, as well as a growing number of females. Another unfolding trend is the adoption of recreational use by consumers who are currently strictly on the medical side, as social taboos against marijuana continue to fall by the wayside.
5. Biotech Marijuana Companies Will Launch Breakthrough Medicines
Medical marijuana use is poised to soar in 2024. Several companies with cannabis-related medical treatments in the developmental pipeline are receiving favorable results so far in clinical trials.
These medicines are on the cusp of FDA approval and introduction into society, leading more doctors to prescribe medical marijuana.
6. Synthetic Cannabis Will Enjoy Exponential Demand
The race for “Cannabis 2.0” has been heating up and it’s poised to be one of the most disruptive trends in the marijuana industry in 2024 and in the years to come.
Big Pharma has made huge strides in recent months to “medicalize” cannabis. That is, mainstream biotech companies are synthetically creating cannabis compounds in the lab that perform just like medicine.
7. Big Tobacco Will Increasingly Join Forces With Pot Companies
Tobacco companies will accelerate their involvement with the cannabis industry. As legal restrictions against marijuana are increasingly removed, tobacco companies will acquire or make large stakes in marijuana companies, to tap into the mainstreaming of pot and also to make up for declining tobacco cigarette sales.
8. Ditto for Big Pharma
Pot legalization has been cutting into the sales, profits, market share, and stock prices of giant drugmakers, which is why these cash-rich behemoths have lobbied against lifting cannabis restrictions. However, their efforts at stopping “the green rush” have met with scant success.
Hence, we’re seeing “Plan B” unfold, whereby Big Pharma resorts to co-opting the unstoppable marijuana megatrend, through mergers and acquisitions and other forms of direct investment
9. Europe Will Emerge as The #1 Marijuana Market
With a population of more than double that of the United States and Canada combined, Europe is set to become the world’s largest legal cannabis market.
North America currently dominates, but that should change next year as more and more European countries legalize weed. Across Europe, with a population of 748 million and an annual health care spend exceeding €2.1 trillion (EUR), the expectation is that the Continent will become the largest world market for cannabis.
10. Marijuana Companies Will Get More Involved in Psychedelics
Big Pharma is plowing considerable resources into researching psychedelics, helping pull these drugs into the pharmaceutical mainstream.
Marijuana companies already are jumping aboard the bandwagon, with research investments in LSD, psilocybin mushrooms, and other psychedelic substances with proven medical and psychological benefits. This trend will gather steam as restrictions against psychedelics are lifted in a growing number of jurisdictions.
Editor’s Note: The data I’ve just presented show that marijuana is becoming a commonplace consumer product around the world.
Although it’s hard to say whether federal legalization will happen in the U.S. in 2024, it’s only a matter of time before Congress finally lifts restrictions against weed. This seismic event would unleash a tsunami of marijuana profits.
In the meantime, state-level legalization will definitely accelerate this election year, creating huge new markets.
To get ahead of the curve, I urge you to read my new book: The Wide World of Weed and Psychedelics. The product of years of painstaking research, my book is now available for sale. Click here to order your copy.
John Persinos is the chief investment strategist of Marijuana Profit Alert. You can reach him at: mailbag@investingdaily.com
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